Dealers here to stay, says NADA

Bricks and mortar vehicle dealerships are highly likely to be part of the vehicle retailing scene in South Africa for many years to come, says the National Automobile Dealers’ Association (NADA).

Mark Dommisse

However, NADA chairperson Mark Dommisse says dealers will become an omnichannel and offer consumers on- and off-line solutions.

What is likely to change, is the need for overly lavish premises, except possibly for luxury vehicle brands, he says.

But Dommisse says the layout of dealerships will likely change with the move to electric vehicles and as other technologies gain momentum.

“Importantly, there is also a challenge in meeting the requirements of the Electronic Communications and Transaction Act (ECTA), which makes it difficult to finalise a deal in its entirety online.

“This will require changes to the ECTA,” he says.

Dommisse stresses that the digitalisation for vehicle retailing is inevitable, and it will be incorporated in future developments of dealer networks.

“Embraced in the right way, by understanding how online can improve and aid offline activities, will be the key to the sustainability of retail motor businesses.

“Ignoring it, or alternatively trying to switch all activities to digital, will be a big mistake and one of the biggest threats to the survival of dealerships in the future.

“However, selling new cars is only one element of what a dealership provides to its customers. There are so many more parts to the whole of what a dealer offers,” he says.

Dommisse acknowledges that with the move to digital for all kinds of information and purchases, it is not surprising that searches and enquiries for cars on the Internet have followed suit.

Engaging online eliminates inefficiencies, such as a potential car buyer needing to go to 10 dealers to see different models of vehicles or to obtain relevant brochures, he says.

However, Dommisse says digital transactions are not finding nearly as much favour in rural areas compared to the metros.

Dommisse says one of Nada’s rural dealers estimates that 90% of its physical interactions are not pre-empted by any digital engagement at all, and the physical face-to-face interaction is important for the first-time buyer.

Dommisse, however, adds that digital will be more relevant in repeat purchases.

“Digital is definitely a new and relevant foundation for any sales transaction and is being embraced by the automotive sector.

“Data from a pre-COVID-19 NADA survey in the US showed that online research accounted for 73% of all initial client vehicle purchasing activities across all buying groups, with Facebook leading Google with other peer-to-peer reviews close on their heels.

“Based on US data, consumers, however, not only want to be able to select a vehicle and ‘build to order’ but also want a human interface to reply to queries within two hours,” he says.

Dommisse believes the same applies in South Africa.

He says a vehicle is an expensive purchase and involves a large commitment, which means customers ideally want somebody to walk them through the various aspects of the purchasing transaction, such as options, vehicle availability, finance as well as insurance and other matters.

Dommisse says prospective buyers also, generally, want to touch and feel what they are buying.

“It is these things that separate buying a vehicle from buying other items online.

“This is particularly true with the latest high-tech models, such as electric vehicles.

“They are generally expensive, and buyers want to see them in the metal first. You cannot just buy a car like that online and expect to have it delivered to your door,” he says.

Dommisse adds that there are many layers to the vehicle buying process, especially with the complication of recent technology, and it will be a customer satisfaction disaster if it is not physically shopped.

“Here the dealer channel has a critical role to play.

“A car and its accessories, funding and protection have become unique packages that require effective management in the digital space, and this is where the biggest challenge lies in completing a full transaction online,” he says.

Dommisse says a vehicle is most likely to be a financed item, but aspirational choices are often limited by what a finance house will approve in terms of finance.

He says each bank has different qualifying criteria and each customer is unique in how he or she may be scored to obtain loan approval.

“A deal can be restructured five to 100 times before it is finalised and the entire process is almost impossible to create seamlessly online,” he says.

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